Can you afford a house now?
Assuming you can afford a house, how much can you afford to pay? These are important questions that many people do not research. This oversight can lead many people to bad debt and even bankruptcy.
Your monthly expenditures will be more than just the housing loan. There will also be insurance, electricity, water, telephone bills, contributions to maintenance fund, medical bills, groceries, unexpected household/auto repairs, lunch money and many other obligations.
They must all be accounted for in your budget spreadsheet. For many of us the purchase of a house or property is the largest financial commitment we will ever make. This makes arranging the most suitable housing loan just as important.
Make sure you know the costs of entering into the loan for the purchase of the property. They include conveyancing, application fees, valuation and legal fees, mortgage insurance (if necessary) and sometimes, extra life insurance premiums.
Some lenders will tell you the advantages of whatever housing loans they are trying to squeeze you into, but rarely will they tell you the disadvantages.
According to an article in a business magazine, the banking system is flush with RM180bil liquidity. This explains the increasingly aggressive sales promotions undertaken by financial institutions for the housing industry.
Always look at the total deal, not some dangling carrots in front of you. Compare the entire housing loan cost of different lenders to determine which is best for you.
I would like to discuss some of the lenders' offers that may not be as attractive as they appear. I will start with the special low interest offered for the first year. Such an offer is usually given during a sale campaign and it usually carries a fixed calendar period with a run-out date. Thus, even if a house buyer commenced his application process immediately upon the launch of the campaign, by the time the loan is approved and disbursement commences, the period remaining to enjoy this special low interest rate will certainly be less than one year.
If he were to start the application process a few months after the campaign, it is likely that he will enjoy the special low rate for only a very short period.
Due to our unique system of progressive payments to the developers, the mean average of the amount disbursed by the banks during the “first year low interest offer,” is really lower than the loan amount. Thus, any saving on interests is really much less than it seems. And these have all been figured out already by those marketing experts in the banks.
A more sincere approach would be to offer the special low interest rate to apply during the progressive payment period and to continue to run for one year after the date when the loan is fully disbursed. Only then can such offers bear some element of sincerity. I believe that anything short of that makes the offer a sales marketing gimmick.
There are other clauses that put house buyers in a disadvantaged situation. Some lenders include clauses in the loan agreements that give them the absolute rights to alter both the Base Lending Rates and/or the margin of interests.
Doesn't this in effect nullify their typical attractive offer of “BLR plus X% for following years?”
One cannot make a special low interest offer in the sales campaign and then contractually (through the loan agreement) creates a clause to allow that special offer interest rate to be invalidated. Make sure you know all the costs of early discharge of the loan.
One other clause to look out for is the redemption of the loan. A house buyer may wish to sell the house and wished to fully-settle the loan.
This is where the conditions for full-settlement differ from one financial institution to another. Think long term.
When one takes a loan, one spends a much longer period servicing the loan beyond the first year or even the second and the third year. So do not be taken in by the very attractive offers during the honeymoon year/s of the tenure of your loan. Remember, the remaining of the 25 years is more important. Do not go for short-term gains only to lose out heavily on the long remaining years.
I would advise house buyers to look beyond the first year of so-called low interest when shopping for housing loans. With the stiff competition among the various lenders today, one should seriously shop around and scrutinise each and every offer before commencing the application process. Talk to your bankers, lawyer friends or seek advice from the National House Buyers Association.
One really has to scrutinise the fine print before making a decision as to which financial institution to go to for a loan. It is about time to standardisde the terms and conditions in the loan agreement so that there will be orderliness in the banking industry.
No more “embedded” clauses within the voluminous stakes of papers one has to initial giving the impression that one has truly read and understood them. It is obviously impossible to read and understand those 40 over pages of legal language that comes with appendixes.
Chang Kim Loong is the honorary secretary-general of The National House Buyers Association, a non-profit, non-governmental, non-political organisation manned by volunteers. For more information, check www.hba.org.my or e-mail info@hba.org.my
By The Star
Saturday, August 25, 2012
Finding the right property mix
Making housing affordable, avoiding a property bubble and ensuring there is no over or under development are some key issues.
FOR the vast majority of people property means getting a respectable roof over their heads with proper amenities in a decent neighbourhood, and getting it affordably.
For others, it is about getting a second or third property or more for the sake of investment – a good return eventually for the price they paid and as a hedge against inflation because property prices mostly continue to rise in the long term much faster than inflation.
The most sophisticated of them don’t just restrict their investments to the residential market but dabble as well in commercial and industrial space such as shops, offices and factories, wherever they may be located.
Socially, there has to be regulation of property development not only to ensure that it is done up to certain standards but to ensure a proper mix between the various kinds of development such as residential, commercial and industrial and the various segments within these broad sectors.
It would be a mistake to micromanage however and within broad guidelines, it is often best to leave it to the market place to adjust things. But it does take a long time for things to adjust in property because of the gestation period before a property can be brought to market.
Ideally, property development should take place under the aegis of a broad master plan which has been formulated after intense study and research, taking into account projected population growth and other demographics. It should be dynamic to take into account changes.
Unfortunately we don’t stick to a plan in terms of development and even when there is a master plan it is often overruled by those in authority for other reasons which are often not compelling from an economic viewpoint.
In residential development, the greatest challenge is, of course, providing decent housing at affordable cost to the vast majority of the population. Unfortunately that is also a function of income – if people are poor, they won’t be able to afford nice houses no matter what.
But we are a middle-income country and we can do some things to keep prices of properties within reasonable levels. The best gauge of that is in relation to our own income level instead of making comparisons with countries with much higher incomes (eg Singapore) or those where special situations make property expensive (eg Mumbai).
Prices are always a function of demand and supply. Some moves simply increase demand, often without a fundamental increase in demand for actual occupation. Opening up property purchases to foreigners often result in a spurt in demand at the time of sale but properties may not get occupied. Look at some high-end properties in Mont’Kiara and around the twin towers area in Kuala Lumpur for illustration.
Also, making a leveraged property purchase easy encourages property speculation. If you pay 5% down and if your next payment is two years later and if the property appreciates just 10%, you have made 100% (before transaction costs) in two years or 50% a year roughly. That is powerful incentive for speculation, creating an artificial demand that can collapse two years out.
To curb such kinds of speculation which lead to temporary surges in house prices and a potential bursting of the bubble in future, it will be necessary to curb foreign property purchases and easy financing schemes.
Meantime, the state and federal governments and their agencies must be more circumspect about handing out their landed assets to developers at very low cost to develop. Developers naturally want to maximise their returns and high-end, high-density properties offer the best returns.
Instead governments and their agencies should develop a master plan for the land they have and allocate the areas meant for low-cost, medium and high-end residential as well as commercial and industrial. Then they can invite the developers to bid for the parcels they will develop.
All that would take a lot of work, yes, but nothing worthwhile comes without proper effort. Examples to emulate for low-cost to medium-cost housing might be the Singapore Housing Development Board which has strict criteria for purchase of property, resale and standards.
Examples not to emulate would be Singapore again which has adopted a free and unfettered stance as far as sale of property to foreigners is concerned which has priced high-end property beyond the vast majority of Singaporeans to become the domain of multi-millionaires.
Incidentally, this is one of the major complaints of Singaporeans who otherwise have little to complain about in terms of economic development and living standards given their tiny space and resources. That has been reflected in voting trends too, leading the government to descend from its mighty perch of “I know it all” to re-examine its policies.
In commercial development, the trend in Malaysia has been to cramp it all in as little space as possible to maximise development profits. Abetment comes from authorities who give approvals with little or no thought of proper planning considerations such as availability of parking, public transport and whether it will cause congestion.
Many developers are willing to take the plunge into commercial development because of high profits. The danger of over-development is the greatest here, especially with plans to set up a new financial district called the Tun Razak Exchange, which will result in plenty of commercial space coming on stream in Kuala Lumpur city. Developers in this area have been granted tax exemption which will cause market distortions by giving them an advantage over others.
Under the circumstances, authorities have to be extra-vigilant to ensure that there are no untoward pressures on the property market, both in terms of a boom or a bust.
Speculation and ill-considered development can cause a volatile, mercurial mix which if it explodes can cause years of agony. Better a sensible, more stable brew that stands the test of time and ages gracefully.
P Gunasegaram (t.p.guna@gmail.com) is an independent consultant and writer. He believes strongly in the old adage that prevention is better than cure.
By The Star
FOR the vast majority of people property means getting a respectable roof over their heads with proper amenities in a decent neighbourhood, and getting it affordably.
For others, it is about getting a second or third property or more for the sake of investment – a good return eventually for the price they paid and as a hedge against inflation because property prices mostly continue to rise in the long term much faster than inflation.
The most sophisticated of them don’t just restrict their investments to the residential market but dabble as well in commercial and industrial space such as shops, offices and factories, wherever they may be located.
Socially, there has to be regulation of property development not only to ensure that it is done up to certain standards but to ensure a proper mix between the various kinds of development such as residential, commercial and industrial and the various segments within these broad sectors.
It would be a mistake to micromanage however and within broad guidelines, it is often best to leave it to the market place to adjust things. But it does take a long time for things to adjust in property because of the gestation period before a property can be brought to market.
Ideally, property development should take place under the aegis of a broad master plan which has been formulated after intense study and research, taking into account projected population growth and other demographics. It should be dynamic to take into account changes.
Unfortunately we don’t stick to a plan in terms of development and even when there is a master plan it is often overruled by those in authority for other reasons which are often not compelling from an economic viewpoint.
In residential development, the greatest challenge is, of course, providing decent housing at affordable cost to the vast majority of the population. Unfortunately that is also a function of income – if people are poor, they won’t be able to afford nice houses no matter what.
But we are a middle-income country and we can do some things to keep prices of properties within reasonable levels. The best gauge of that is in relation to our own income level instead of making comparisons with countries with much higher incomes (eg Singapore) or those where special situations make property expensive (eg Mumbai).
Prices are always a function of demand and supply. Some moves simply increase demand, often without a fundamental increase in demand for actual occupation. Opening up property purchases to foreigners often result in a spurt in demand at the time of sale but properties may not get occupied. Look at some high-end properties in Mont’Kiara and around the twin towers area in Kuala Lumpur for illustration.
Also, making a leveraged property purchase easy encourages property speculation. If you pay 5% down and if your next payment is two years later and if the property appreciates just 10%, you have made 100% (before transaction costs) in two years or 50% a year roughly. That is powerful incentive for speculation, creating an artificial demand that can collapse two years out.
To curb such kinds of speculation which lead to temporary surges in house prices and a potential bursting of the bubble in future, it will be necessary to curb foreign property purchases and easy financing schemes.
Meantime, the state and federal governments and their agencies must be more circumspect about handing out their landed assets to developers at very low cost to develop. Developers naturally want to maximise their returns and high-end, high-density properties offer the best returns.
Instead governments and their agencies should develop a master plan for the land they have and allocate the areas meant for low-cost, medium and high-end residential as well as commercial and industrial. Then they can invite the developers to bid for the parcels they will develop.
All that would take a lot of work, yes, but nothing worthwhile comes without proper effort. Examples to emulate for low-cost to medium-cost housing might be the Singapore Housing Development Board which has strict criteria for purchase of property, resale and standards.
Examples not to emulate would be Singapore again which has adopted a free and unfettered stance as far as sale of property to foreigners is concerned which has priced high-end property beyond the vast majority of Singaporeans to become the domain of multi-millionaires.
Incidentally, this is one of the major complaints of Singaporeans who otherwise have little to complain about in terms of economic development and living standards given their tiny space and resources. That has been reflected in voting trends too, leading the government to descend from its mighty perch of “I know it all” to re-examine its policies.
In commercial development, the trend in Malaysia has been to cramp it all in as little space as possible to maximise development profits. Abetment comes from authorities who give approvals with little or no thought of proper planning considerations such as availability of parking, public transport and whether it will cause congestion.
Many developers are willing to take the plunge into commercial development because of high profits. The danger of over-development is the greatest here, especially with plans to set up a new financial district called the Tun Razak Exchange, which will result in plenty of commercial space coming on stream in Kuala Lumpur city. Developers in this area have been granted tax exemption which will cause market distortions by giving them an advantage over others.
Under the circumstances, authorities have to be extra-vigilant to ensure that there are no untoward pressures on the property market, both in terms of a boom or a bust.
Speculation and ill-considered development can cause a volatile, mercurial mix which if it explodes can cause years of agony. Better a sensible, more stable brew that stands the test of time and ages gracefully.
P Gunasegaram (t.p.guna@gmail.com) is an independent consultant and writer. He believes strongly in the old adage that prevention is better than cure.
By The Star
KSL jumps on the Kesas bandwagon
It is developing the Canary Garden township along corridor of the busy highway
AS one drives along the Kesas Highway heading towards Klang, new townships are being developed closer to Klang town nowadays, leveraging on the popularity of other townships that have emerged over the years.
The development of Kota Kemuning by Hicom-Gamuda Development Sdn Bhd, which is the nearest to Subang Jaya, started about 20 years.
Bandar Puteri Klang by the IOI group and Bandar Botanic, also by Gamuda group, were other townships that were launched subsequently.
Much of the growth along the Kesas corridor came about because of access. Today, as one drives further, one will see a lot of signboards promoting upcoming projects.
Home owner Kalai, who lives in Bandar Puteri, says: “Today, the Kesas Highway has a lot of traffic, much like Lebuhraya Damansara-Puchong. The amount of traffic using this highway is an indication that the population along Kesas is growing.”
After the turn off at Banting, there is the newly-developed Bandar Parklands by the WCT group.
The Island and Peninsular group and other developers are also there. Johor-based developer KSL Holdings Bhd has also set its sight in the vicinity.
Patrick Khoo Keng Ghiap, the project director for Canary Garden, says: “We would like to build our base here and establish our name in the Klang Valley and eventually work our way up to Rawang and Semenyih. The margins here are much higher compared with Johor projects.”
Khoo is the son of managing director Michael Khoo whose brothers are also holding positions in the company.
Canary Garden is a 446-acre development near WCT's Bandar Parklands and fronts Jalan Langat which provide direct access to the Kesas highway. There is a 2km river or stream cutting across it, dividing the land in half.
Under state laws, all rivers, streams and drains are state land, which means there is a buffer on both sides of river that cannot be developed. The 446 acres exclude this 50 acres which the developer will landscape.
KSL head of marketing Chris Fong says the company will landscape an additional 50 acres on the 446 acres in order to add value to the properties in that development.
The plan is to use the river as a natural border which separates the landed units totalling about 1,300 from the commercial area of about 90 acres. Cluster homes were launched at just below RM1mil a few months ago while semi-detached units, with and without lifts, are priced from RM1.3mil.
The commercial area will occupy up to 90 acres and will have a gross development value of about RM3bil, Fong says.
The plan is to have a three-storey linear mall with internal and external retail space and al fresco dining along the riverside with a total gross area of over eight million sq ft with a plot ratio of 1:4.
KSL developed the KSL City Mall in Johor Baru opposite Holiday Plaza which comprised a hotel and serviced apartments.
The same template will be used here. This time, seven blocks of serviced apartments of 28-storey will sit on top of the mall. There will also be a hotel, a few schools and a tertiary education block. He says the idea is to make the place self-contained.
In addition to the proposed 1,960 serviced apartment units, condominiums and other commercial blocks encircle the entire project.
Fong says Canary Garden is not a strata development, but there will be a perimeter fencing around it and the units will be individually titled, which means there is room for renovation.
There will also be a monthly security charge of RM250 per household which the developer will bear in the first 24 months. The owners have the option to employ their own security from the third year onwards. Monthly charges may vary.
The local authorities will upkeep the place. The maintenance charge of the serviced apartment has not yet been determined.
The plan, he says, is to have several thousand housing units comprising mostly high-rise projects on that 446 acres.
Fong says the company is not building a gated and guarded landed community because residents will have to form a joint management body. An agent from Reapfield says landed units are currently more popular than high-rise projects, because there is an abundance of land in Klang.
“Landed units, by comparison, will be cheaper because there is a cost to having a high-rise development. So far, high-rise developments have not been popular in Klang.”
While Canary Garden is easily assessible from the Kesas Highway, in time to come, more townships will be developed fronting Jalan Langat and congestion may be an issue, the agent says.
By The Star
AS one drives along the Kesas Highway heading towards Klang, new townships are being developed closer to Klang town nowadays, leveraging on the popularity of other townships that have emerged over the years.
The development of Kota Kemuning by Hicom-Gamuda Development Sdn Bhd, which is the nearest to Subang Jaya, started about 20 years.
Bandar Puteri Klang by the IOI group and Bandar Botanic, also by Gamuda group, were other townships that were launched subsequently.
Much of the growth along the Kesas corridor came about because of access. Today, as one drives further, one will see a lot of signboards promoting upcoming projects.
Home owner Kalai, who lives in Bandar Puteri, says: “Today, the Kesas Highway has a lot of traffic, much like Lebuhraya Damansara-Puchong. The amount of traffic using this highway is an indication that the population along Kesas is growing.”
After the turn off at Banting, there is the newly-developed Bandar Parklands by the WCT group.
The Island and Peninsular group and other developers are also there. Johor-based developer KSL Holdings Bhd has also set its sight in the vicinity.
Patrick Khoo Keng Ghiap, the project director for Canary Garden, says: “We would like to build our base here and establish our name in the Klang Valley and eventually work our way up to Rawang and Semenyih. The margins here are much higher compared with Johor projects.”
Khoo is the son of managing director Michael Khoo whose brothers are also holding positions in the company.
Canary Garden is a 446-acre development near WCT's Bandar Parklands and fronts Jalan Langat which provide direct access to the Kesas highway. There is a 2km river or stream cutting across it, dividing the land in half.
Under state laws, all rivers, streams and drains are state land, which means there is a buffer on both sides of river that cannot be developed. The 446 acres exclude this 50 acres which the developer will landscape.
KSL head of marketing Chris Fong says the company will landscape an additional 50 acres on the 446 acres in order to add value to the properties in that development.
The plan is to use the river as a natural border which separates the landed units totalling about 1,300 from the commercial area of about 90 acres. Cluster homes were launched at just below RM1mil a few months ago while semi-detached units, with and without lifts, are priced from RM1.3mil.
The commercial area will occupy up to 90 acres and will have a gross development value of about RM3bil, Fong says.
The plan is to have a three-storey linear mall with internal and external retail space and al fresco dining along the riverside with a total gross area of over eight million sq ft with a plot ratio of 1:4.
KSL developed the KSL City Mall in Johor Baru opposite Holiday Plaza which comprised a hotel and serviced apartments.
The same template will be used here. This time, seven blocks of serviced apartments of 28-storey will sit on top of the mall. There will also be a hotel, a few schools and a tertiary education block. He says the idea is to make the place self-contained.
In addition to the proposed 1,960 serviced apartment units, condominiums and other commercial blocks encircle the entire project.
Fong says Canary Garden is not a strata development, but there will be a perimeter fencing around it and the units will be individually titled, which means there is room for renovation.
There will also be a monthly security charge of RM250 per household which the developer will bear in the first 24 months. The owners have the option to employ their own security from the third year onwards. Monthly charges may vary.
The local authorities will upkeep the place. The maintenance charge of the serviced apartment has not yet been determined.
The plan, he says, is to have several thousand housing units comprising mostly high-rise projects on that 446 acres.
Fong says the company is not building a gated and guarded landed community because residents will have to form a joint management body. An agent from Reapfield says landed units are currently more popular than high-rise projects, because there is an abundance of land in Klang.
“Landed units, by comparison, will be cheaper because there is a cost to having a high-rise development. So far, high-rise developments have not been popular in Klang.”
While Canary Garden is easily assessible from the Kesas Highway, in time to come, more townships will be developed fronting Jalan Langat and congestion may be an issue, the agent says.
By The Star
Friday, August 17, 2012
Mah Sing on track for full-year RM2.5bil sales target, says MD
PETALING JAYA: Mah Sing Group Bhd is on track to hit its full-year sales target, recording RM1.29bil sales in six months, representing 52% of its target of RM2.5bil.
Unbilled sales were about RM2.69bil or two times the revenue recognised from the property division in 2011.
In a statement, Mah Sing group managing director-cum-group chief executive Tan Sri Leong Hoy Kum said the company had been enjoying a consistent sales trend by rolling out what the market wanted, allowing it to deliver commendable double-digit growth in both revenue and profits.
The group delivered vacant possessions for 780 properties to property owners in the first half of 2012, and looks forward to delivering vacant possessions for another 1,290 units in the second half.
For 2012, deliveries of vacant possessions are estimated to bring in an additional RM315mil.
The group recorded revenue of RM913mil and net profit of RM120mil for the first half ended June 30. This represents an improvement of 25% and 42% respectively over the previous corresponding period.
The current-quarter revenue and net profit of RM455.2mil and RM60.1mil represents 9% and 39% improvement respectively over the previous corresponding quarter.
Revenue from the property segment soared by 29% to RM808mil on the back of strong sales of RM1.29bil as at June 30.
“For the first half of 2012, we have seen very strong sales from Kinrara Residence,” Leong said.
By The Star
Unbilled sales were about RM2.69bil or two times the revenue recognised from the property division in 2011.
In a statement, Mah Sing group managing director-cum-group chief executive Tan Sri Leong Hoy Kum said the company had been enjoying a consistent sales trend by rolling out what the market wanted, allowing it to deliver commendable double-digit growth in both revenue and profits.
The group delivered vacant possessions for 780 properties to property owners in the first half of 2012, and looks forward to delivering vacant possessions for another 1,290 units in the second half.
For 2012, deliveries of vacant possessions are estimated to bring in an additional RM315mil.
The group recorded revenue of RM913mil and net profit of RM120mil for the first half ended June 30. This represents an improvement of 25% and 42% respectively over the previous corresponding period.
The current-quarter revenue and net profit of RM455.2mil and RM60.1mil represents 9% and 39% improvement respectively over the previous corresponding quarter.
Revenue from the property segment soared by 29% to RM808mil on the back of strong sales of RM1.29bil as at June 30.
“For the first half of 2012, we have seen very strong sales from Kinrara Residence,” Leong said.
By The Star
PJI to buy land from Noble Star services
KUALA LUMPUR: PJI Construction Sdn Bhd, a wholly-owned subsidiary of PJI Holdings Bhd, has signed a conditional sale and purchase agreement with Noble Star Services Sdn Bhd for a proposed acquisition of a piece of land for RM13.2mil cash.
The company said the land, identified in Damansara, measures 5,257 sq m, together with all buildings erected or to be built on the land.
The buildings would include a single-storey warehouse, a three-storey office building, two guardhouses, a rubbish disposal site and a power sub-station,” it said in a filing with Bursa Malaysia.
By The Star
The company said the land, identified in Damansara, measures 5,257 sq m, together with all buildings erected or to be built on the land.
The buildings would include a single-storey warehouse, a three-storey office building, two guardhouses, a rubbish disposal site and a power sub-station,” it said in a filing with Bursa Malaysia.
By The Star
House price hike likely
Penang properties said to increase 5%-10% due to more costly cement
GEORGE TOWN: The selling price of properties in Penang will soon surge by 5%-10% following the recent move by Lafarge Malayan Cement to raise cement prices by about 6%, according to housing developers here.
Following Lafarge's announcement, a 50kg bag of cement is now priced at RM17.50, compared to RM16.50 before the hike.
Lim: ‘The price of sand is now RM40- RM43 per cu yard.’
Penang Master Builders & Building Materials Dealers Association president Lim Kai Seng said 60% to 80% of the materials used for a building comprised cement and cement-related materials.
“This is why an increase in cement price will have a significant impact on property prices.
“The other cement manufacturers in the country have sent signals that they will raise prices very soon,” Lim said.
There are six cement producers in Malaysia, namely YTL Cement Bhd, Tasek Corp Bhd, Cement Industries of Malaysia Bhd, Lafarge, CMS Cement Sdn Bhd, and Holcim (M) Sdn Bhd.
Only Sarawak-based CMS Cement has confirmed it would keep prices at the current level.
Lim said the price of other essential building materials such as sand and aggregate had also increased.
“The price of sand is now between RM40 and RM43 per cu yard, depending on the grade, compared to RM38-RM40 earlier this year.
“The price of aggregates is now at RM21 per tonne, compared to RM20 per tonne earlier this year,” he said.
House prices on the island are expected to rise by 10%, while in Seberang Prai, housing prices are expected rise by 5%, following the hike in cement price.
Kuala Lumpur-based developers such as Mah Sing Group Bhd and SP Setia Bhd with projects in Penang will continue to absorb the cost of the cement price increase.
Ooi: ‘There will be a 10% hike in the selling price of properties in Penang.’
Ideal Property Development Sdn Bhd managing director Datuk Alex Ooi said the company was now revising the selling prices of its new projects upwards, due to the hike in cement price.
“There will be at least a 10% hike in the selling price of properties on the island.
“A hike in cement price means the price of all cement-related products such as concrete and bricks will rise. Construction cost will go up by between 15% and 20%.
“We expect the rest of the cement manufacturers in the country to adjust the price of cement upwards in the next one to two months,” he said.
In addition to the rise in cement prices, the cost of labour and transportation charges have also increased this year.
Tambun Indah Land Bhd managing director K.S. Teh said the cost of labour had increased to RM45 per day this year, compared to RM35 a year ago.
Transportation charges for sand have increased to RM450 per truck load this year from RM400 a year ago.
“There is also a labour shortage, as many Indonesian workers have gone back to Indonesia, which is booming currently.
“The selling price of properties will be impacted by the hike in raw materials and labour costs.
“However, Tambun Indah will absorb the increase in the price of raw materials until year-end.
“We will revise our pricing next year,” he added.
Teh said the selling price of properties on the island would increase more because of the additional transportation charges to ferry the raw materials to the island.
“This is why the increase in property prices on the island will be around 10%, compared to about 5% in Seberang Prai,” he said.
Tambun Indah will be launching next month the Straits Garden@Jelutong on the island, the Pearl Residence@Pearl City and Pearl Indah@Pearl City projects in Simpang Ampat.
The Straits Garden is a high-rise project comprising 183 condominiums priced from RM688,000 onwards, while the Pearl Residence@Pearl City and Pearl Indah@Pearl City schemes comprise landed properties priced between RM353,000 and RM508,000.
Mah Sing managing director and chief executive Tan Sri Leong Hoy Kum said the cement price hike would have less than a 1% impact on construction cost.
“Most of our projects have been tendered out and the construction costs are already locked in,” he added.
SP Setia property (north) general manager Khoo Teck Chong said the group would absorb this impact for now to be competitive.
”If other raw material prices such as bricks, rebar and tiles were to increase drastically, we may then have to review and adjust our property selling price accordingly,” Khoo added.
Meanwhile, the Malaysian Competition Commission (MyCC) chief executive officer Shila Dorai Raj had said the price hike by cement manufacturers did not at this juncture warrant a formal investigation.
“Price increases are by themselves not anti-competitive in nature. However, if there is evidence of collusion among the competitors to increase prices, this would be of concern to MyCC and may merit an investigation,” she said.
By The Star
GEORGE TOWN: The selling price of properties in Penang will soon surge by 5%-10% following the recent move by Lafarge Malayan Cement to raise cement prices by about 6%, according to housing developers here.
Following Lafarge's announcement, a 50kg bag of cement is now priced at RM17.50, compared to RM16.50 before the hike.
Penang Master Builders & Building Materials Dealers Association president Lim Kai Seng said 60% to 80% of the materials used for a building comprised cement and cement-related materials.
“This is why an increase in cement price will have a significant impact on property prices.
“The other cement manufacturers in the country have sent signals that they will raise prices very soon,” Lim said.
There are six cement producers in Malaysia, namely YTL Cement Bhd, Tasek Corp Bhd, Cement Industries of Malaysia Bhd, Lafarge, CMS Cement Sdn Bhd, and Holcim (M) Sdn Bhd.
Only Sarawak-based CMS Cement has confirmed it would keep prices at the current level.
Lim said the price of other essential building materials such as sand and aggregate had also increased.
“The price of sand is now between RM40 and RM43 per cu yard, depending on the grade, compared to RM38-RM40 earlier this year.
“The price of aggregates is now at RM21 per tonne, compared to RM20 per tonne earlier this year,” he said.
House prices on the island are expected to rise by 10%, while in Seberang Prai, housing prices are expected rise by 5%, following the hike in cement price.
Kuala Lumpur-based developers such as Mah Sing Group Bhd and SP Setia Bhd with projects in Penang will continue to absorb the cost of the cement price increase.
Ideal Property Development Sdn Bhd managing director Datuk Alex Ooi said the company was now revising the selling prices of its new projects upwards, due to the hike in cement price.
“There will be at least a 10% hike in the selling price of properties on the island.
“A hike in cement price means the price of all cement-related products such as concrete and bricks will rise. Construction cost will go up by between 15% and 20%.
“We expect the rest of the cement manufacturers in the country to adjust the price of cement upwards in the next one to two months,” he said.
In addition to the rise in cement prices, the cost of labour and transportation charges have also increased this year.
Tambun Indah Land Bhd managing director K.S. Teh said the cost of labour had increased to RM45 per day this year, compared to RM35 a year ago.
Transportation charges for sand have increased to RM450 per truck load this year from RM400 a year ago.
“There is also a labour shortage, as many Indonesian workers have gone back to Indonesia, which is booming currently.
“The selling price of properties will be impacted by the hike in raw materials and labour costs.
“However, Tambun Indah will absorb the increase in the price of raw materials until year-end.
“We will revise our pricing next year,” he added.
Teh said the selling price of properties on the island would increase more because of the additional transportation charges to ferry the raw materials to the island.
“This is why the increase in property prices on the island will be around 10%, compared to about 5% in Seberang Prai,” he said.
Tambun Indah will be launching next month the Straits Garden@Jelutong on the island, the Pearl Residence@Pearl City and Pearl Indah@Pearl City projects in Simpang Ampat.
The Straits Garden is a high-rise project comprising 183 condominiums priced from RM688,000 onwards, while the Pearl Residence@Pearl City and Pearl Indah@Pearl City schemes comprise landed properties priced between RM353,000 and RM508,000.
Mah Sing managing director and chief executive Tan Sri Leong Hoy Kum said the cement price hike would have less than a 1% impact on construction cost.
“Most of our projects have been tendered out and the construction costs are already locked in,” he added.
SP Setia property (north) general manager Khoo Teck Chong said the group would absorb this impact for now to be competitive.
”If other raw material prices such as bricks, rebar and tiles were to increase drastically, we may then have to review and adjust our property selling price accordingly,” Khoo added.
Meanwhile, the Malaysian Competition Commission (MyCC) chief executive officer Shila Dorai Raj had said the price hike by cement manufacturers did not at this juncture warrant a formal investigation.
“Price increases are by themselves not anti-competitive in nature. However, if there is evidence of collusion among the competitors to increase prices, this would be of concern to MyCC and may merit an investigation,” she said.
By The Star
Thursday, August 16, 2012
PJI to buy land for RM13.2m
PJI Construction Sdn Bhd, a wholly-owned subsidiary of PJI Holdings Bhd, has signed a conditional sale and purchase agreement with Noble Star Services Sdn Bhd for a proposed acquisition of a piece of land for a cash consideration of RM13.2 million.
The company said the land, identified in Damansara, measures 5,257 square metres, together with all buildings erected or to be built on the land.
The buildings will include a single-storey warehouse, a three-storey office building, two guardhouses, a rubbish disposal site and a power sub-station," it said in a filing to Bursa Malaysia.
The company said the property shall upon completion of the proposed acquisition would become the headquarters for the PJI Group of Companies. PJI is currently renting its business premises in Shah Alam.
With the proposed acquisition would enable PJI to have better control of its group’s operations and administrative matters, it added.
By Bernama
The company said the land, identified in Damansara, measures 5,257 square metres, together with all buildings erected or to be built on the land.
The buildings will include a single-storey warehouse, a three-storey office building, two guardhouses, a rubbish disposal site and a power sub-station," it said in a filing to Bursa Malaysia.
The company said the property shall upon completion of the proposed acquisition would become the headquarters for the PJI Group of Companies. PJI is currently renting its business premises in Shah Alam.
With the proposed acquisition would enable PJI to have better control of its group’s operations and administrative matters, it added.
By Bernama
Wednesday, August 15, 2012
Efforts to curb property speculation
The government will initiate measures to address various issues gripping the property sector, including curbing rampant speculative activities in the market.
Housing and Local Government Minister Datuk Seri Chor Chee Heung said he would present to the cabinet findings of an industry meeting which could be used to come up with innovative ways to build affordable homes.
"The government has done fairly well in addressing the housing issues of the lower income. However, 40 per cent of the medium-income society still need accommodation.
"My ministry will use some of the findings to improve the sector," Chor told reporters here after opening a roundtable discussion on "Housing Affordability - Issues and Challenges".
The government will put forward recommendations, which will be based on proposals made by Real Estate and Housing Developers Association Malaysia (Rehda) such as on how to curb speculative property prices, financing, abandoned projects and sluggish developments.
Metro Kajang Holdings Bhd group managing director Datuk Eddy Chen Lok Loi said for example, a house built in Perlis cost RM250,000 but the same house using the very same materials but built in KLCC would cost RM1 million.
"This is caused by land cost due to two different locations. Nevertheless, there are some of the issues which Rehda will look into to address this such as materials prices. Working groups and a task force have been set up," said Chen.
Meanwhile, National House Buyers Association secretary general Chang Kim Loong said all parties, including the government and developers, need to launch proactive measures to stop steep price increases in the property market due to false demand and excessive speculation fuelled by easy mortgages and low real property gain tax.
"There is a huge mismatch between what the average household income can afford to buy compared to what is available in the market. A homeless generation will emerge and create various social problems," said Chang.
Chang said the average rakyat in a major urban area was struggling to buy his dream home where the average household with income of RM5,962 in 2009 would not be able to qualify for a 90 per cent loan over a 30-year period.
Assuming the average household income rises 15 per cent this year, the household may still not qualify for a 90 per cent loan in far areas such as Kajang, let alone in hot areas such as Kuala Lumpur.
He added that the government must also fine-tune the Bumiputera quota which has not made any headways.
"Don't get me wrong, we have no qualms over the discount for the first buy. But when you buy properties for the fourth and the fifth time and get up to 15 per cent discount ... that is wrong," said Chang.
By Business Times
Housing and Local Government Minister Datuk Seri Chor Chee Heung said he would present to the cabinet findings of an industry meeting which could be used to come up with innovative ways to build affordable homes.
"My ministry will use some of the findings to improve the sector," Chor told reporters here after opening a roundtable discussion on "Housing Affordability - Issues and Challenges".
The government will put forward recommendations, which will be based on proposals made by Real Estate and Housing Developers Association Malaysia (Rehda) such as on how to curb speculative property prices, financing, abandoned projects and sluggish developments.
Metro Kajang Holdings Bhd group managing director Datuk Eddy Chen Lok Loi said for example, a house built in Perlis cost RM250,000 but the same house using the very same materials but built in KLCC would cost RM1 million.
"This is caused by land cost due to two different locations. Nevertheless, there are some of the issues which Rehda will look into to address this such as materials prices. Working groups and a task force have been set up," said Chen.
Meanwhile, National House Buyers Association secretary general Chang Kim Loong said all parties, including the government and developers, need to launch proactive measures to stop steep price increases in the property market due to false demand and excessive speculation fuelled by easy mortgages and low real property gain tax.
"There is a huge mismatch between what the average household income can afford to buy compared to what is available in the market. A homeless generation will emerge and create various social problems," said Chang.
Chang said the average rakyat in a major urban area was struggling to buy his dream home where the average household with income of RM5,962 in 2009 would not be able to qualify for a 90 per cent loan over a 30-year period.
Assuming the average household income rises 15 per cent this year, the household may still not qualify for a 90 per cent loan in far areas such as Kajang, let alone in hot areas such as Kuala Lumpur.
He added that the government must also fine-tune the Bumiputera quota which has not made any headways.
"Don't get me wrong, we have no qualms over the discount for the first buy. But when you buy properties for the fourth and the fifth time and get up to 15 per cent discount ... that is wrong," said Chang.
By Business Times
Making way for affordable homes
REHDA’S CALL: Government should free up some land for construction of affordable homes to ease pent-up demand
The government must free some of its land to make way for affordable homes to address the current pent-up demand situation.
Real Estate and Housing Developers Association Malaysia (Rehda) president Datuk Seri Michael Yam Kong Choy said it must act now before the situation becomes critical.
"As of now, Malaysia needs 180,000 homes a year but the industry can only supply 100,000 units. One of the many ways to counter this problem is to identify federal or state lands which can be converted into affordable housing schemes," Yam told reporters at Rehda's headquarters here yesterday.
Yam was presenting a paper at the roundtable discussion on "Housing Affordability - Issues and Challenges", launched by Housing and Local Government Minister Datuk Seri Chor Chee Heung.
The land includes sites of government quarters, public golf courses or land after the relocation of residential schools and zoos.
"We need to shift development focus of government-owned land to affordable housing, instead of commercial projects such as the Rubber Research Institute land in Sungai Buloh, Pudu jail and the Sungai Besi airport.
For immediate action plan, focus must be given to build affordable homes, from low cost with prices ranging between RM150,000 and RM350,000.
"There should be no more low cost quota. Government must provide social housing or transit housing for the hardcore and urban poor."
Yam said for planning control, the industry should be allowed higher plot ratio to enable the development of smaller units.
Developers should be given incentives for projects in public transport and transit areas with higher density/plot ratio.
To address issues of increasing cost, the sector must be free of new compliance costs, more certainty in Bumiputera quota release system, faster approvals and freeze imposition of policies or guideline laws that add to the cost of development.
Financing must be cheaper for the first time buyer and more tiered payments where homebuyers can pay less now and gradually pay more later (to be reviewed every five years).
For loan applications, housebuyers must be given more flexible criteria and not merely focus on net income.
Yam said the government should assist buyers with acquisition costs such as lower stamp duty for affordable homes.
As an example, a stamp duty of 0.5 per cent for the first transaction rate of RM300,000 compared with one per cent at the moment for the first RM100,000.
Another action plan is to make connectivity to urban areas more accessible, improve public transportation system and reasonable travelling distance to place of work.
For the medium to long term plan, the government should refurbish existing buildings such as public low cost houses, council homes and government complexes to affordable homes.
The Malay reserve land or new villages can also be new potential sites for affordable housing as well as building over existing transport infrastructure such as high rise apartments over LRT (light rail transit) stations or over KTM Komuter routes.
By Business Times
The government must free some of its land to make way for affordable homes to address the current pent-up demand situation.
"As of now, Malaysia needs 180,000 homes a year but the industry can only supply 100,000 units. One of the many ways to counter this problem is to identify federal or state lands which can be converted into affordable housing schemes," Yam told reporters at Rehda's headquarters here yesterday.
Yam was presenting a paper at the roundtable discussion on "Housing Affordability - Issues and Challenges", launched by Housing and Local Government Minister Datuk Seri Chor Chee Heung.
The land includes sites of government quarters, public golf courses or land after the relocation of residential schools and zoos.
"We need to shift development focus of government-owned land to affordable housing, instead of commercial projects such as the Rubber Research Institute land in Sungai Buloh, Pudu jail and the Sungai Besi airport.
For immediate action plan, focus must be given to build affordable homes, from low cost with prices ranging between RM150,000 and RM350,000.
"There should be no more low cost quota. Government must provide social housing or transit housing for the hardcore and urban poor."
Yam said for planning control, the industry should be allowed higher plot ratio to enable the development of smaller units.
Developers should be given incentives for projects in public transport and transit areas with higher density/plot ratio.
To address issues of increasing cost, the sector must be free of new compliance costs, more certainty in Bumiputera quota release system, faster approvals and freeze imposition of policies or guideline laws that add to the cost of development.
Financing must be cheaper for the first time buyer and more tiered payments where homebuyers can pay less now and gradually pay more later (to be reviewed every five years).
For loan applications, housebuyers must be given more flexible criteria and not merely focus on net income.
Yam said the government should assist buyers with acquisition costs such as lower stamp duty for affordable homes.
As an example, a stamp duty of 0.5 per cent for the first transaction rate of RM300,000 compared with one per cent at the moment for the first RM100,000.
Another action plan is to make connectivity to urban areas more accessible, improve public transportation system and reasonable travelling distance to place of work.
For the medium to long term plan, the government should refurbish existing buildings such as public low cost houses, council homes and government complexes to affordable homes.
The Malay reserve land or new villages can also be new potential sites for affordable housing as well as building over existing transport infrastructure such as high rise apartments over LRT (light rail transit) stations or over KTM Komuter routes.
By Business Times
Govt aims for affordable housing for middle-income group
PETALING JAYA: Housing and Local Government Minister Datuk Seri Chor Chee Heung said the housing needs of the middle-income group, which formed more than 40% of the community, must be addressed and hoped that the 1Malaysia People's Housing Scheme (Prima) announced last year would progress speedily.
Low cost housing is capped at RM42,000, while affordable housing cost between RM85,000 and RM300,000.
Chor said the Government had been successful in providing low cost housing, but there was a need to look into the grouses of the middle-income group.
Chor said this to reporters after attending a roundtable discussion entitled “Housing Affordability: Issues and Challenges”, jointly organised by the Real Estate Housing Developers Association (Rehda) and the Eastern Regional Organisation for Planning and Human Settlement yesterday.
“The Ministry will consider the views and suggestions by the task force to be formed and we will put forward views and perspectives to the Federal Government.
“Affordable housing has become an important topic, with the greatest need being in urban centres like Kuala Lumpur and Penang and to a certain degree in Johor Baru due to urban migration.
“The Prima scheme is a laudable project...(but) it is moving sluggishly. We hope to see Prima making speedy progress. At the same time, we also hope the developers will play their role,” he said.
He said it might be more efficient to streamline the different agencies which provided housing. Chor said it was not possible to compare Malaysia's housing situation with Singapore because the government there was able to step in quickly to provide both low and middle-cost housing units.
Earlier, at the discussion, Rehda president Datuk Michael Yam listed out the challenges faced by developers when providing social housing including the high cost of land. “Planning requirements need to be reviewed because we are beginning to see a proliferation of small serviced apartments into the market. Developers are resorting to building small units in order to increase the number of units to make the project viable,” Yam said.
He called on the Government to free government and state land for affordable housing and to exempt developers from having to fork out capital for utilities infrastructure like reservoir and sub-stations.
“In developed countries, the government build all these and the developers pay a contribution. When developers have to fork out capital expenditure for the infrastructure, invariably the consumer will have to pay for it. This results in an increase in housing cost,” said Yam.
Secretary-general of the House Buyers Association Chang Kim Loong called on the Government to bring back the real property gains tax in full force to curb speculation.
Effective since Jan 1, this year, the gains from property held for less than two years were subjected to a 10% tax. For properties held between two and five years, a 2% was imposed while those who kept it for more than five years are exempted from tax.
Under the previous ruling, a Malaysian individual who sells his property within the first two years of purchase is taxed 30% of the gains. The rates slide to 20% (third year), 15% (fourth year) and 5% (fifth year). He is not taxed on the sixth and subsequent year.
By The Star
Low cost housing is capped at RM42,000, while affordable housing cost between RM85,000 and RM300,000.
Chor said the Government had been successful in providing low cost housing, but there was a need to look into the grouses of the middle-income group.
Chor said this to reporters after attending a roundtable discussion entitled “Housing Affordability: Issues and Challenges”, jointly organised by the Real Estate Housing Developers Association (Rehda) and the Eastern Regional Organisation for Planning and Human Settlement yesterday.
“The Ministry will consider the views and suggestions by the task force to be formed and we will put forward views and perspectives to the Federal Government.
“Affordable housing has become an important topic, with the greatest need being in urban centres like Kuala Lumpur and Penang and to a certain degree in Johor Baru due to urban migration.
“The Prima scheme is a laudable project...(but) it is moving sluggishly. We hope to see Prima making speedy progress. At the same time, we also hope the developers will play their role,” he said.
He said it might be more efficient to streamline the different agencies which provided housing. Chor said it was not possible to compare Malaysia's housing situation with Singapore because the government there was able to step in quickly to provide both low and middle-cost housing units.
Earlier, at the discussion, Rehda president Datuk Michael Yam listed out the challenges faced by developers when providing social housing including the high cost of land. “Planning requirements need to be reviewed because we are beginning to see a proliferation of small serviced apartments into the market. Developers are resorting to building small units in order to increase the number of units to make the project viable,” Yam said.
He called on the Government to free government and state land for affordable housing and to exempt developers from having to fork out capital for utilities infrastructure like reservoir and sub-stations.
“In developed countries, the government build all these and the developers pay a contribution. When developers have to fork out capital expenditure for the infrastructure, invariably the consumer will have to pay for it. This results in an increase in housing cost,” said Yam.
Secretary-general of the House Buyers Association Chang Kim Loong called on the Government to bring back the real property gains tax in full force to curb speculation.
Effective since Jan 1, this year, the gains from property held for less than two years were subjected to a 10% tax. For properties held between two and five years, a 2% was imposed while those who kept it for more than five years are exempted from tax.
Under the previous ruling, a Malaysian individual who sells his property within the first two years of purchase is taxed 30% of the gains. The rates slide to 20% (third year), 15% (fourth year) and 5% (fifth year). He is not taxed on the sixth and subsequent year.
By The Star
Plans for 'no frills' homes
KELANA JAYA: Malaysia is mulling to build its first affordable "no frills" houses so that the rakyat can own homes of their own.
Mooted by the Real Estate and Housing Developers Association Malaysia and the Housing and Local Government Ministry, the house will be 30 per cent cheaper and will be custom-finished by the owner.
Immediate past president Datuk Ng Seing Liong said the house will be "naked" but equipped with basic amenities such as the kitchen and the toilet but there will be no partitions to segregate the rooms.
"This is to allow owners to choose to have two or three rooms, depending on the owner's marital status or the number of children," Ng told reporters here yesterday at a roundtable on "Housing Affordability - Issues and Challenges".
Ng said the no frills house will be 30 per cent cheaper than the current affordable home price tag of between RM80,000 and RM350,000.
Ng said the concept is not new and has been introduced in China and the Philippines. He said all parties are discussing on it at the moment.
Minister of Housing and Local Government Datuk Seri Chor Chee Heung said the no frills home is one of the sectors innovative ways to build affordable homes.
Housing is a very serious problem worldwide, especially for the middle class. Even ministers in China find it difficult to buy homes despite it being a socialist country.
By Business Times
Mooted by the Real Estate and Housing Developers Association Malaysia and the Housing and Local Government Ministry, the house will be 30 per cent cheaper and will be custom-finished by the owner.
Immediate past president Datuk Ng Seing Liong said the house will be "naked" but equipped with basic amenities such as the kitchen and the toilet but there will be no partitions to segregate the rooms.
"This is to allow owners to choose to have two or three rooms, depending on the owner's marital status or the number of children," Ng told reporters here yesterday at a roundtable on "Housing Affordability - Issues and Challenges".
Ng said the no frills house will be 30 per cent cheaper than the current affordable home price tag of between RM80,000 and RM350,000.
Ng said the concept is not new and has been introduced in China and the Philippines. He said all parties are discussing on it at the moment.
Minister of Housing and Local Government Datuk Seri Chor Chee Heung said the no frills home is one of the sectors innovative ways to build affordable homes.
Housing is a very serious problem worldwide, especially for the middle class. Even ministers in China find it difficult to buy homes despite it being a socialist country.
By Business Times
Sp Setia's Liew, PNB likely to stay out of share placement
PETALING JAYA: SP Setia Bhd president/chief executive officer Tan Sri Liew Kee Sin and Permodalan Nasional Bhd (PNB) are unlikely to be taking up shares in the proposed share placement exercise which the property developer announced on Monday.
An analyst told StarBiz that the proposal would be pointless if PNB and Liew were among those identified to take up the shares since among the stated objectives of the share placement was to increase liquidity of the stock.
“They've to do it because the stock's not liquid and the announcement has been expected for some time,” she said. PNB currently has a 51.63% stake while through Skim Amanah Saham Bumiputera, it has another 18.41% stake. Liew has a 5.65% stake, the Employees Provident Fund (EPF) has a 5.28% while Kumpulan Wang Persaraan has a 5.10% stake.
The share placement exercise comes on the heels of announcements by SP Setia of several multi-billion ringgit joint-venture projects, of which the most prominent would be the Battersea project in London announced early last month and the Qinzhou Industrial Park in south-west China announced in April.
Besides the proposed share placement, SP Setia has also proposed a new employees' share option scheme (Esos) of up to 15% of the issued and paid-up share capital of the company while proposing the cancellation of the existing Esos.
SP Setia and PNB were not able to reply to further queries on the proposed share placement exercise at press time.
Meanwhile, a Sime Darby Bhd official said the company had no plans to do a cash call at the moment. “Balance sheet-wise, we're in good shape,” she said. Sime Darby has a 40% stake in the joint venture to develop the Battersea project, the EPF holds a 20% stake while SP Setia owns the remainder stake.
To recap, Maybank Investment Bank Bhd said in an announcement to the stock exchange that SP Setia was proposing a new issuance of up to 15% of the issued and paid-up share capital of the company or up to 322.69 million shares.
The exercise would raise a minimum RM957.4mil assuming the price of the placement shares was fixed at RM3.19 per share based on a 10% discount to the five-day volume weighted average market price and a minimum take-up rate of 300.11 million shares.
The proceeds would be utilised to part-finance the cost of land acquisitions and initial project development expenditure, to meet the general working capital requirements as well as to defray the expenses relating to the proposals.
CIMB Investment Bank Bhd said in a note that the impact of the placement would be slightly negative on valuations.
“We estimate the private placement will dilute revised net asset value (RNAV) by 3% to RM4.17 (per share) and financial year ending Oct 31, 2013 (FY13) to FY15 earnings per share (EPS) by 6% to 12%,” it said, adding that the Esos would be an important means of retaining and incentivising staff.
Affin Investment Bank Bhd analyst Isaac Chow said in a report that the proposal, while positive in the long-term, would dampen investors' sentiment of the company in the short term.
He said assuming all the shares were placed out at RM3.23, the placement would dilute its EPS for FY13 to FY14 by 7% to 8%.
Chow recommends that investors acquire the shares via the placement exercise rather than in the open market. He has put the “reduce” rating and target price (of RM3.60) based on 15% discount to RNAV under review.
SP Setia's share price closed two sen lower at RM3.49 yesterday.
By The Star
An analyst told StarBiz that the proposal would be pointless if PNB and Liew were among those identified to take up the shares since among the stated objectives of the share placement was to increase liquidity of the stock.
“They've to do it because the stock's not liquid and the announcement has been expected for some time,” she said. PNB currently has a 51.63% stake while through Skim Amanah Saham Bumiputera, it has another 18.41% stake. Liew has a 5.65% stake, the Employees Provident Fund (EPF) has a 5.28% while Kumpulan Wang Persaraan has a 5.10% stake.
The share placement exercise comes on the heels of announcements by SP Setia of several multi-billion ringgit joint-venture projects, of which the most prominent would be the Battersea project in London announced early last month and the Qinzhou Industrial Park in south-west China announced in April.
Besides the proposed share placement, SP Setia has also proposed a new employees' share option scheme (Esos) of up to 15% of the issued and paid-up share capital of the company while proposing the cancellation of the existing Esos.
SP Setia and PNB were not able to reply to further queries on the proposed share placement exercise at press time.
Meanwhile, a Sime Darby Bhd official said the company had no plans to do a cash call at the moment. “Balance sheet-wise, we're in good shape,” she said. Sime Darby has a 40% stake in the joint venture to develop the Battersea project, the EPF holds a 20% stake while SP Setia owns the remainder stake.
To recap, Maybank Investment Bank Bhd said in an announcement to the stock exchange that SP Setia was proposing a new issuance of up to 15% of the issued and paid-up share capital of the company or up to 322.69 million shares.
The exercise would raise a minimum RM957.4mil assuming the price of the placement shares was fixed at RM3.19 per share based on a 10% discount to the five-day volume weighted average market price and a minimum take-up rate of 300.11 million shares.
The proceeds would be utilised to part-finance the cost of land acquisitions and initial project development expenditure, to meet the general working capital requirements as well as to defray the expenses relating to the proposals.
CIMB Investment Bank Bhd said in a note that the impact of the placement would be slightly negative on valuations.
“We estimate the private placement will dilute revised net asset value (RNAV) by 3% to RM4.17 (per share) and financial year ending Oct 31, 2013 (FY13) to FY15 earnings per share (EPS) by 6% to 12%,” it said, adding that the Esos would be an important means of retaining and incentivising staff.
Affin Investment Bank Bhd analyst Isaac Chow said in a report that the proposal, while positive in the long-term, would dampen investors' sentiment of the company in the short term.
He said assuming all the shares were placed out at RM3.23, the placement would dilute its EPS for FY13 to FY14 by 7% to 8%.
Chow recommends that investors acquire the shares via the placement exercise rather than in the open market. He has put the “reduce” rating and target price (of RM3.60) based on 15% discount to RNAV under review.
SP Setia's share price closed two sen lower at RM3.49 yesterday.
By The Star
Tuesday, August 14, 2012
Encorp to expand landbank
PROPERTY developer Encorp Bhd, which currently has a total landbank of 107.36ha, is looking for more land in Malaysia and in the region.
Executive chairman Datuk Seri Mohd Effendi Norwawi said the company is currently in advance negotiation to buy several pieces of land in Peninsular Malaysia while scouting for opportunities in Australia and the Asean region.
"Our business development team is very busy reviewing various locations with potential for development in both local and overseas to expand our current land banks," he said.
Encorp's property projects have a combined gross development value of RM3.4 billion.
Effendi said with Encorp's achievements to date, the group is expected to generate a profit of about RM680 million over a period of five years.
"However, we are in the process of looking at other prospective ventures that will enhance revenue, profit and sustainability in the coming years," he said.
For this year, Encorp will be developing the integrated resort and international golf course in Cherating, the launch of Encorp Marina at Puteri Harbour in Johor and Encorp Ferringhi in Penang.
"More future projects are in the pipeline in both Klang Valley and our resort home development in Cherating," he said in a recent e-mail interview.
On the recent acquisition of land in Perth, Australia, Effendi said it will keep the group busy for the next five to eight years.
Encorp recently bought a 11,000 sq m property in Perth for about RM18.54 million to be developed into a mixed residential and commercial project.
The project will have a gross development value of A$13 million (RM42.77 million) with construction expected to begin in the second quarter of 2014 and completed by 2017.
"Our maiden project in Perth has enjoyed good take-up rate and with this, we are looking for more opportunities in Australia. We are also exploring opportunities in other Asean countries," said Effendi.
Its maiden project in Perth is named the Residences on McCallum Lane and was launched to investors in October last year.
It is located in a prime location, close to Perth's central business district and is a 10-minute drive away from Curtin University, and 10 to 15 minutes away from University of Western Australia.
Back home, Encorp's major land- bank include the 18.24ha for its Encorp Strand project, 84ha of its Cahaya Alam project, 1.32ha in Johor for the Puteri Harbour project and 2.32ha of land in Batu Feringghi, Penang.
By Business Times
Executive chairman Datuk Seri Mohd Effendi Norwawi said the company is currently in advance negotiation to buy several pieces of land in Peninsular Malaysia while scouting for opportunities in Australia and the Asean region.
Encorp's property projects have a combined gross development value of RM3.4 billion.
Effendi said with Encorp's achievements to date, the group is expected to generate a profit of about RM680 million over a period of five years.
"However, we are in the process of looking at other prospective ventures that will enhance revenue, profit and sustainability in the coming years," he said.
For this year, Encorp will be developing the integrated resort and international golf course in Cherating, the launch of Encorp Marina at Puteri Harbour in Johor and Encorp Ferringhi in Penang.
"More future projects are in the pipeline in both Klang Valley and our resort home development in Cherating," he said in a recent e-mail interview.
On the recent acquisition of land in Perth, Australia, Effendi said it will keep the group busy for the next five to eight years.
Encorp recently bought a 11,000 sq m property in Perth for about RM18.54 million to be developed into a mixed residential and commercial project.
The project will have a gross development value of A$13 million (RM42.77 million) with construction expected to begin in the second quarter of 2014 and completed by 2017.
"Our maiden project in Perth has enjoyed good take-up rate and with this, we are looking for more opportunities in Australia. We are also exploring opportunities in other Asean countries," said Effendi.
Its maiden project in Perth is named the Residences on McCallum Lane and was launched to investors in October last year.
It is located in a prime location, close to Perth's central business district and is a 10-minute drive away from Curtin University, and 10 to 15 minutes away from University of Western Australia.
Back home, Encorp's major land- bank include the 18.24ha for its Encorp Strand project, 84ha of its Cahaya Alam project, 1.32ha in Johor for the Puteri Harbour project and 2.32ha of land in Batu Feringghi, Penang.
By Business Times
KLCC Property posts net profit of RM91.6mil
KUALA LUMPUR: KLCC Property Holdings Bhd posted a net profit of RM91.6mil, or 9.81 sen per share for the second quarter ended June 30. Its revenue stood at RM288.6mil during the quarter.
For the six months ended June 30, KLCC Property posted a net profit of RM193.1mil on revenue of RM564.4mil.
On March 2, KLCC Property announced the change of financial year-end from March 31 to Dec 31 beginning from April 2011. As a result, there is no equivalent comparative quarter.
KLCC Property’s pre-tax profit of RM184.4mil achieved in the second quarter was up by RM2.5mil or 1.4% higher than the preceding quarter mainly due to improved operating profit. Its revenue of RM288.6mil for the second quarter increased by RM12.8mil when compared with the preceding quarter attributable mainly to the higher revenue from hotel, the Menara 3 Petronas office and improved revenue from retail segment (Suria KLCC and Menara 3 Petronas).
“The directors are of the view that the results for the remaining 2012 period will remain stable due to long-term office tenancies and expected improvement in retail occupancy. The hotel segment will continue to trade in a competitive environment,” it said in the notes accompanying its financial results.
By The Star
For the six months ended June 30, KLCC Property posted a net profit of RM193.1mil on revenue of RM564.4mil.
On March 2, KLCC Property announced the change of financial year-end from March 31 to Dec 31 beginning from April 2011. As a result, there is no equivalent comparative quarter.
KLCC Property’s pre-tax profit of RM184.4mil achieved in the second quarter was up by RM2.5mil or 1.4% higher than the preceding quarter mainly due to improved operating profit. Its revenue of RM288.6mil for the second quarter increased by RM12.8mil when compared with the preceding quarter attributable mainly to the higher revenue from hotel, the Menara 3 Petronas office and improved revenue from retail segment (Suria KLCC and Menara 3 Petronas).
“The directors are of the view that the results for the remaining 2012 period will remain stable due to long-term office tenancies and expected improvement in retail occupancy. The hotel segment will continue to trade in a competitive environment,” it said in the notes accompanying its financial results.
By The Star
E&O loses more than RM400m in market value
The shares of Eastern & Oriental dived after the Securities Commission said it's investigating trading related to the stock.
EASTERN & Oriental Bhd (E&O) lost more than RM400 million of its market capitalisation as nervous investors sold shares of the property developer after the Securities Commission (SC) said it's investigating trading related to the stock.
From the word go, E&O shares were in negative territory, opening the trading session some 33 sen lower at RM1.57 sen a share. It ended yesterday at RM1.54 with 24.8 million shares exchanging hands.
CIMB, in a research report yesterday, had advised investors to wait for the shares to drop to the RM1.50 level before they start accumulating the shares again.
Dealers said that the report helped stymie panic-selling in E&O's mother share, but it did not translate to the E&O call warrants, which had a free-for-all selldown.
The E&O call warrants, which expire at the end of this month, opened the trading day some 81 per cent lower at three sen. It ended the day at 3.5 sen per call warrant with some 30 million call warrants traded.
Just last Friday, E&O was among the most sought-after stock on the exchange, with investors chasing the shares up to the maximum limit-up level, following a Web-based news portal's report that the SC will order Sime Darby Bhd to make a general offer for the E&O shares which they do not own.
A year ago, Sime Darby had bought some 30 per cent of E&O, a niche based high-end property developer from Penang.
The report said that the decision was made after a review by the commission's leadership under its new chairman Datuk Ranjit Ajit Singh.
However, the same evening, the SC released a statement saying that its position on the general offer requirement remained unchanged as per its statement issued October last year, which said that Sime Darby does not have to make a general offer for the remaining shares in E&O.
The regulator also added that it has started examining the trading activities associated with the relevant counters arising from the rumours.
By Business Times
EASTERN & Oriental Bhd (E&O) lost more than RM400 million of its market capitalisation as nervous investors sold shares of the property developer after the Securities Commission (SC) said it's investigating trading related to the stock.
CIMB, in a research report yesterday, had advised investors to wait for the shares to drop to the RM1.50 level before they start accumulating the shares again.
Dealers said that the report helped stymie panic-selling in E&O's mother share, but it did not translate to the E&O call warrants, which had a free-for-all selldown.
The E&O call warrants, which expire at the end of this month, opened the trading day some 81 per cent lower at three sen. It ended the day at 3.5 sen per call warrant with some 30 million call warrants traded.
Just last Friday, E&O was among the most sought-after stock on the exchange, with investors chasing the shares up to the maximum limit-up level, following a Web-based news portal's report that the SC will order Sime Darby Bhd to make a general offer for the E&O shares which they do not own.
A year ago, Sime Darby had bought some 30 per cent of E&O, a niche based high-end property developer from Penang.
The report said that the decision was made after a review by the commission's leadership under its new chairman Datuk Ranjit Ajit Singh.
However, the same evening, the SC released a statement saying that its position on the general offer requirement remained unchanged as per its statement issued October last year, which said that Sime Darby does not have to make a general offer for the remaining shares in E&O.
The regulator also added that it has started examining the trading activities associated with the relevant counters arising from the rumours.
By Business Times
UM Land share holders advised to accept takeover offer
PETALING JAYA: Independent adviser Affin Investment Bank Bhd has advised minority shareholders of United Malayan Land Bhd (UM Land) to accept the takeover offer of RM2.50 per share by Seleksi Juang Sdn Bhd (SJSB) and parties acting in concert (PAC), who hold a combined 77.52%.
It said yesterday the RM2.50 offer price per share was fair and reasonable, as it was a 13 sen premium to the closing market price of RM2.37 on July 11, which was the last trading day prior to the takeover notice.
Affin Investment Bank also said UM Land's shares had not traded at or above the offer price for the past five years. “Holders should note that there is no assurance that the market price of the UM Land shares will remain trading at this level in the future,” it said in a circular to shareholders.
The stock traded at an average monthly volume of 881,758 shares, or 1.30% of the free float for the past year leading up to the offer date. Affin Investment cautioned the minority shareholders holding the remaining 22.48% of UM Land that the illiquidity of the shares may impact their ability to realise their investment in the open market.
It said as SJSB and the PAC held 77.52% of UM Land's total issued shares, irregardless of the level of acceptance of the offer, the company did not comply with the public shareholding spread requirement. SJSB and the PAC plan to delist the company from Bursa Malaysia Main Market.
Due to the fact that as at the date of notice, both SJSB and the PAC collectively held more than a 50% stake, the offer is not conditional upon any minimum number of valid acceptances of the offer shares being received.
If the company is delisted, its shares will no longer be able to be traded. “Holders should note that they may not be able to realise their investments at the same consideration under the offer and may encounter difficulties in disposing them,” Affin Investment said.
The offerors intend to privatise the company in order to have greater flexibility to plan and execute long-term business opportunities. It has a number of projects in the pipeline, which comprises of township and niche developments.
UM Land expects its township developments to contribute to earnings in the long term, as it requires an extended period of time. This may affect the company's ability to pay dividends in the future.
The company has been paying dividends for the past five years. It adopted a dividend policy of a 25% payout ratio, effective financial year ending Dec 31, 2012 (FY12).
As dividend policy is subject to availability of future investments and cashflow position of the company, there is no assurance to shareholders that the payout ratio will hold at the same level.
UM Land had announced on July 12 that had it received a takeover offer from SJSB and the PAC to buy the remaining 22.48%, or 67.81 million shares, not already owned by them for a cash consideration of RM2.50 per share.
Analysts had said that it was a good deal for the parties offering to buy out the company as the offer price represented a discount of about 18% from UM Land's net asset value per share of RM3.04.
In the first quarter ending March 31, UM Land posted a lower net profit of RM136,000 compared with RM13.97mil in the same period last year. Revenue had also fallen to RM51.6mil from RM82.2mil previously. UM Land shares closed at RM2.49 yesterday.
By The Star
It said yesterday the RM2.50 offer price per share was fair and reasonable, as it was a 13 sen premium to the closing market price of RM2.37 on July 11, which was the last trading day prior to the takeover notice.
Affin Investment Bank also said UM Land's shares had not traded at or above the offer price for the past five years. “Holders should note that there is no assurance that the market price of the UM Land shares will remain trading at this level in the future,” it said in a circular to shareholders.
The stock traded at an average monthly volume of 881,758 shares, or 1.30% of the free float for the past year leading up to the offer date. Affin Investment cautioned the minority shareholders holding the remaining 22.48% of UM Land that the illiquidity of the shares may impact their ability to realise their investment in the open market.
It said as SJSB and the PAC held 77.52% of UM Land's total issued shares, irregardless of the level of acceptance of the offer, the company did not comply with the public shareholding spread requirement. SJSB and the PAC plan to delist the company from Bursa Malaysia Main Market.
Due to the fact that as at the date of notice, both SJSB and the PAC collectively held more than a 50% stake, the offer is not conditional upon any minimum number of valid acceptances of the offer shares being received.
If the company is delisted, its shares will no longer be able to be traded. “Holders should note that they may not be able to realise their investments at the same consideration under the offer and may encounter difficulties in disposing them,” Affin Investment said.
The offerors intend to privatise the company in order to have greater flexibility to plan and execute long-term business opportunities. It has a number of projects in the pipeline, which comprises of township and niche developments.
UM Land expects its township developments to contribute to earnings in the long term, as it requires an extended period of time. This may affect the company's ability to pay dividends in the future.
The company has been paying dividends for the past five years. It adopted a dividend policy of a 25% payout ratio, effective financial year ending Dec 31, 2012 (FY12).
As dividend policy is subject to availability of future investments and cashflow position of the company, there is no assurance to shareholders that the payout ratio will hold at the same level.
UM Land had announced on July 12 that had it received a takeover offer from SJSB and the PAC to buy the remaining 22.48%, or 67.81 million shares, not already owned by them for a cash consideration of RM2.50 per share.
Analysts had said that it was a good deal for the parties offering to buy out the company as the offer price represented a discount of about 18% from UM Land's net asset value per share of RM3.04.
In the first quarter ending March 31, UM Land posted a lower net profit of RM136,000 compared with RM13.97mil in the same period last year. Revenue had also fallen to RM51.6mil from RM82.2mil previously. UM Land shares closed at RM2.49 yesterday.
By The Star
Monday, August 13, 2012
I-Berhad to fast track i-City
I-BERHAD is speeding up the developments of its RM5 billion i-City project in Shah Alam, Selangor.
Executive chairman Tan Sri Lim Kim Hong said the company had also been approached by several parties to replicate the i-City project in other cities.
"We will consider replicating i-City when the project is about 50 per cent completed. We expect to reach that in three to four years," Lim said after a dialogue session at Balai Berita, here, yesterday.
The 42ha i-City is a knowledge and tourism project with 18 office towers and residences, three hotels, a one million sq ft mall, a cybercentre, shop offices and retail units.
It will also have several leisure components like a snow walk, a theme park and a waterpark.
The project is 20 per cent completed.
Lim, who owns a 65 per cent stake in I-Berhad, has invested more than RM1 billion in the i-City project over the last five years.
In the next six months, I-Berhad will start building Soho (small-office-home-office) and Sovo (small-office-versatile-office) units, the mall and a three-star hotel.
There will be a total of 950 Soho and 220 Sovo units, with combined gross development value (GDV) of close to RM600 million.
For the mall and hotel, Lim said I-Berhad was expected to ink a deal within the next two to three months with international operators to jointly build and manage the properties.
Lim said in the next three years, the property development division would be the biggest revenue generator for the company,
I-Berhad aims to launch RM500 million worth of properties a year at i-City. This will give it a steady revenue of about RM500 million per annum from 2014.
Lim said he also expected the leisure division to hold strong, raking in RM50 million in revenue next year and up to 40 per cent in profit margin.
For the financial year ended December 31 2011, I-Berhad registered a pre-tax profit of RM1.84 million on revenues of RM27.3 million.
By Business Times
A more active PHB will focus on property buys, development and act as master developer
PETALING JAYA: Pelaburan Hartanah Bhd (PHB), a subsidiary and operating arm of Yayasan Amanah Hartanah Bumiputera, will focus on three core areas property acquisition, property development and being a master developer.
Managing director and chief executive officer Datuk Kamalul Arifin Othman said PHB would be more active in the local property scene as it sought to buy real estates in other state capitals.
“Our mandate is to invest in the local market,” he told StarBiz in an interview.
On the possibility of it going abroad, he said, “It is a possibility that we may one day buy assets overseas.”
Kamalul said that on the local front, PHB would like to have a presence in all the state capitals, including Sabah and Sarawak.
“We are actively pursuing our property acquisitions. We are going into property development and more into land banking. We are not going to stop just because the price of land is going up.”
He said PHB wanted to focus on these three areas because it aimed to increase the size of its Amanah Hartanah Bumiputera (AHB) fund.
Kamalul said the fund was launched in 2010 with a size of RM1bil which was sold in three months. “We want to increase the fund size this year, depending on the properties we are going to inject into AHB,” he said.
AHB is the first syariah-compliant fund backed by real estates. Unlike normal unit trust, PHB will buy the asset first and then only raise money.
“We buy the properties and transfer the beneficial ownership to the fund in the sense that every month, the fund is secured with rental guarantee,” he said.
PHB currently has several prominent and strategically located properties in the Klang Valley. The value of its total property assets to-date stands at RM1.5bil, generating a gross annual rental income of about RM100mil. This works out to an annual yield of 6.67%, with 160 tenants over nine projects.
Said Kamalul: “We will focus on acquiring property that will predominantly be completed Grade A buildings, go into property development, which we have already done in KL Sentral, and be a master developer.”
Some of the office buildings in its stable include four out of five blocks in Peremba Square, Menara Bumiputra-Commerce which is next to Sogo departmental store in the city, CP Tower in Section 16 Petaling Jaya, Wisma Consplant in Subang Jaya and Menara Prisma in Putrajaya.
It also owns two retail blocks in Peremba Square, DEMC Specialist Hospital that it purchased in November last year and industrial building Logistics Warehouse in Shah Alam, Selangor.
“We want to diversify our revenue (in order to be resilient),” he said.
Kamalul said besides accummulating property assets for its recurring income, PHB's second core business was property development.
Its maiden project is Nu Sentral in KL Sentral. With a gross development value (GDV) of RM1.4bil, it will comprise a seven-storey mall with gross floor area of 1.1 million sq ft and nett lettable area of 650,000sq ft. It will be KL Sentral's first mall.
The second component of the development is a 27-storey office building Menara 1 Sentrum at Nu Sentral with estimated gross floor area of 640,000 sq ft and net lettable area of 450,000 sq ft. It will be built according to specifications of LEED Silver green building. LEED is the acronym for Leadership in Energy and Environmental Design (LEED).
Both components of its Nu Sentral project the mall and the office block are expected to be completed in the first quarter of 2013 and will have about 2,000 parking bays.
In terms of site location and frontage, Kamalul said it would be among the best. A bridge will be constructed to link the mall to the transport interchange.
Possible tenants for the mall include Parkson, cineplex operator Golden Screen Cinemas GSC, Wesria Food Sdn Bhd which will operate and manage a food court, a bowling alley and an MPH bookstore. Mydin will be introducing a new brand at the mall.
PHB will retain ownership of the entire project. “Rental lease will be competitive with other retail lots in KL Sentral,” Kamalul said.
PHB's second property development is the extension of Gleneagles Hospital that is expected to be completed in three years. It has signed an agreement with Gleneagles to build the medical facilities with a GDV of RM150mil and has signed a long lease with the hospital operator.
The remainder of its five acres at the Gleneagles extension will be used to build serviced apartments and PHB is already in discussions with several operators. PHB will own the asset but it will be managed and operated by another party.
“The patients at Gleneagles Hospital are very high profile. They and their family need a place to stay and rest,” said Kamalul.
On PHB's plan of becoming a master developer, Kamalul said this would be done at the former Lever Brothers land in Bangsar which it bought from Perbadanan Aset Keretapi.
“We have submitted our masterplan to the City Hall and it is currently being evaluated. We want to be the master developer for that land.
“We are going to plan the development and we will get the developer to build for us. But the important criteria is, they must give value-added proposals. For example, they develop the land and at the same time, provide a tenant to take up a substantial portion of the place.”
Kamalul said the project would be a mixed integrated community development which would include high-end condominium, retail centres and office buidings.
“It will be developed in phases. On the demand side, it will be green in terms of getting the credentials. That will keep us busy for the next several years. There may be opportunities for joint ventures with some of the parties involved,” he said.
By The Star
KLCC Properties posts higher pre-tax profit
KLCC Properties Holdings Bhd chalked up a higher pre-tax profit of RM184.45 million for the second quarter ended June 30, 2012 compared with RM148.41 million registered in the same period last year.
Revenue rose to RM288.61 million, during the period under review, from RM240.3 million recorded previously, it said in a statement.
"Revenue from property investment increased 21.5 per cent to RM126 million in the second quarter primarily due to the maiden recognition of rental revenue from Menara 3 Petronas and upward rent revisions in Menara Dayabumi and Menara ExxonMobil.
"This segment also benefited from lower finance cost due to the Midciti refinancing undertaken in October last year," it said.
However, KLCC Properties said this was partially offset by finance costs incurred on Menara 3 Petronas which was previously capitalised during the construction phase.
The company said the results for the remaining year would remain stable due to long-term office tenancies and expected improvement in retail occupancy.
"The hotel segment will continue to trade in a competitive environment," it added.
By Bernama
Revenue rose to RM288.61 million, during the period under review, from RM240.3 million recorded previously, it said in a statement.
"Revenue from property investment increased 21.5 per cent to RM126 million in the second quarter primarily due to the maiden recognition of rental revenue from Menara 3 Petronas and upward rent revisions in Menara Dayabumi and Menara ExxonMobil.
"This segment also benefited from lower finance cost due to the Midciti refinancing undertaken in October last year," it said.
However, KLCC Properties said this was partially offset by finance costs incurred on Menara 3 Petronas which was previously capitalised during the construction phase.
The company said the results for the remaining year would remain stable due to long-term office tenancies and expected improvement in retail occupancy.
"The hotel segment will continue to trade in a competitive environment," it added.
By Bernama
E&O plunges on trading probe
Eastern & Oriental Bhd, a Malaysian property developer, fell the most in six years after the Securities Commission said it’s investigating a surge in its shares last week when an online newspaper “rumor” that the regulator may order Sime Darby Bhd to make a general offer.
The stock sank as much as 18 per cent in Kuala Lumpur trading to RM1.56, its largest intraday decline since June 6, 2006 and today’s biggest drop in the FTSE Bursa Malaysia Top 100 Index, which gained 0.2 per cent. It pared losses to RM1.60 at 10:41 a.m. local time.
E&O jumped 28 per cent on Aug 10, the most since August 2003, after the Malaysian Insider reported that the commission would U-turn and order Sime Darby to make a general offer after acquiring a 30 per cent stake last year. Last October’s decision that this isn’t required remains unchanged and is subject to a judicial review pending in court, the regulator said in an e- mailed statement the same day.
“The clarification by the Securities Commission should put to rest such speculation for now,” Terence Wong, head of research at Kuala Lumpur-based CIMB Group Holdings Bhd., wrote in a report today. “We were very surprised by the Malaysian Insider report. We expect E&O’s share price to give back most of Friday’s 42 sen gain immediately.”
Palm oil producer Sime Darby agreed to pay RM766 million (US$246 million), or RM2.30 per share, for its E&O stake in August last year to expand its Malaysian real estate business. That was a 59 percent premium to its last closing price at the time and 55 per cent more than E&O’s share price on Aug. 9 before the Insider report. General offers are typically made at the original acquisition price.
Examination Underway
The commission has begun an examination of trading arising from “the rumor,” its statement said.
Investors should wait for E&O’s shares to fall to about RM1.50 before accumulating the stock, said CIMB’s Wong, who kept his trading buy call. This means the stock’s total return is expected to exceed the benchmark FTSE Bursa Malaysia KLCI Index by at least 5 per cent over the next three months.
“Longer-term fundamental prospects of the group remain promising as its Penang properties are selling well and the launch of new projects in Kuala Lumpur and Johor in the fourth quarter of 2012 and first quarter of 2013 should excite the market,” he said.
By Bloomberg
The stock sank as much as 18 per cent in Kuala Lumpur trading to RM1.56, its largest intraday decline since June 6, 2006 and today’s biggest drop in the FTSE Bursa Malaysia Top 100 Index, which gained 0.2 per cent. It pared losses to RM1.60 at 10:41 a.m. local time.
E&O jumped 28 per cent on Aug 10, the most since August 2003, after the Malaysian Insider reported that the commission would U-turn and order Sime Darby to make a general offer after acquiring a 30 per cent stake last year. Last October’s decision that this isn’t required remains unchanged and is subject to a judicial review pending in court, the regulator said in an e- mailed statement the same day.
“The clarification by the Securities Commission should put to rest such speculation for now,” Terence Wong, head of research at Kuala Lumpur-based CIMB Group Holdings Bhd., wrote in a report today. “We were very surprised by the Malaysian Insider report. We expect E&O’s share price to give back most of Friday’s 42 sen gain immediately.”
Palm oil producer Sime Darby agreed to pay RM766 million (US$246 million), or RM2.30 per share, for its E&O stake in August last year to expand its Malaysian real estate business. That was a 59 percent premium to its last closing price at the time and 55 per cent more than E&O’s share price on Aug. 9 before the Insider report. General offers are typically made at the original acquisition price.
Examination Underway
The commission has begun an examination of trading arising from “the rumor,” its statement said.
Investors should wait for E&O’s shares to fall to about RM1.50 before accumulating the stock, said CIMB’s Wong, who kept his trading buy call. This means the stock’s total return is expected to exceed the benchmark FTSE Bursa Malaysia KLCI Index by at least 5 per cent over the next three months.
“Longer-term fundamental prospects of the group remain promising as its Penang properties are selling well and the launch of new projects in Kuala Lumpur and Johor in the fourth quarter of 2012 and first quarter of 2013 should excite the market,” he said.
By Bloomberg
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